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Wednesday, July 17, 2013

The Tale of Two Economies

"It was the best of times, it was the worst of times, it was the age
of wisdom, it was the age of foolishness, it was the epoch of belief, it was
the epoch of incredulity, it was the season of Light, it was the season of
Darkness, it was the spring of hope, it was the winter of despair, we had
everything before us, we had nothing before us, we were all going direct to
Heaven, we were all going direct the other way --- in short, the period was so
far like the present period, that some of its noisiest authorities insisted on
its being received, for good or for evil, in the superlative degree of
comparison only." ~ A Tale of Two Cities (1859) by Charles Dickens (He
could have written that today.)

In an earlier post I said that I would never post about the banks again,
thinking that I had said all there was to say on the subject. But after seeing
their latest earnings reports, I just couldn't help myself (go ahead, sue me).
So today I'm going to rant about the banks again, among other things (as they
are all inter-related).

"Let me issue and control a nation's money and I care not who makes
its laws." ~ A quote that was attributed to Amsel
Rothschild. In other words, "Because I own the people who make the
laws, I am above all the laws." Whether or not the quote was actually
ever muttered, it might have very well been the reality ever since 2,000 BC in
the history
of banking. And it's true today, just
ask Eric Holder. Banking, maybe the world's second oldest profession (the
oldest survives on one basic human instinct) is thoroughly encapsulated in
another very basic and ancient human instinct, greed.

In the aftermath of the Great Recession, banks have been doing just
fine...they always do well...they run their host governments and
"sovereign" nations, they control the politics, and they essentially
own most major businesses --- as well has most of the real estate. They have
one economy, while the masses ("the little people") have quite a
different one.

We have one set of laws and the bankers are above them all. We can go to
jail for lying
on a food stampapplication,
while the bankers can defraud the taxpayers of trillions of dollars and still
remain "too big to jail". That's the global reality --- they have
all the money; and anything and everyone can be bought or sold --- everything
is for sale for the right price --- especially most of our politicians, just
as they always have been, and just as they always will be. That's the other
global reality (not only is business globalized, so is multi-national greed
and corruption).

When we "bailed out the banks", the way I understood it (in the
most simplest terms), the Fed (our central bank) digitally created almost $1
trillion out of thin air, then "loaned" it to the major banks
("to ease the credit market") at next to zero percent interest. Then
the banks, in turn, bought up a ton of U.S. treasuries (fully backed the full
faith of the U.S. government --- by us) and earned interest on those
government securities, making untold "profits". Then after paying
back the Fed, paid themselves huge bonuses. The Fed calls this "quantitative
easing" --- to stimulate the economy when the basic economic theory
of "supply-and-demand" breaks down. When the Fed Chairman Ben
Bernanke hinted that he might reverse this policy, business leaders went into
a panic. No more free money, now they would actually have to sell something to
earn a profit! OMG!!!

But sell what and where, and to who? Should they enable more "emerging
markets" to produce consumers with low-wages in foreign countries, or
should they hire more part-time low-wage workers here in the U.S.?

Meanwhile, with robo-signing and other nefarious money-making schemes (like
using debit cards to pay employees), the banks and other major
corporations have continued to extract more untold wealth from us. For
"show", a few banks were fined a nominal fine by the government
(which had already been previously calculated into the banks' cost of doing business, should they ever be called out), and then the banks just
carried on with "business as usual". Congress passed the 2010
Dodd-Frank bill, which was supposed to help curtail some of the banking
abuses; but that has been under attack ever since by banking lobbyists ---
with both the Democrats and the Republicans in Congress as their allies. (Pete
and Repeat were in a boat. Pete fell out, who was left?)

The Huffington Post - Bank
of America's Earnings Jump 70 Percent On Cost-Cutting: "Bank of
America says its second-quarter profits soared, helped by higher earnings from
investment banking and cost-cutting...the country's second-biggest bank has
been slimming down and cutting jobs...a strategy to escape potential extra
scrutiny from regulators... some of the job cuts were in servicing troubled
mortgages, which is shrinking as the bank works through those loans."
Bank of America is
running a scam on the American people to dump $1 trillion of mortgage
loans. The banks might not want mortgages any more, they might want more
stocks in other companies, and maybe more foreign investment, and they most
likely want to gamble again on derivatives (credit default swaps).

As
major institutional investors, just like private equity firms (e.g.
Vanguard and Bain Capital) and hedge funds, banks are heavily invested in
major corporations, and they too are doing just fine in this economy...

And the CEOs of all these major corporations are also doing very
well...earning record salaries (again)

New
York Times: The median compensation of CEOs at 200 of the nation’s
biggest public companies came in at $15.1 million last year, a 16 percent
jump from 2011, according to Equilar, the executive compensation analysis
firm. The pay packages — including salary, bonus, benefits, stock and
option grants — ranged from $96.2 million at Oracle to $11.1 million at
General Motors.

The tech industry has also been doing well, but they want more profits, and
they will do it at the cost of American jobs with more
H-1B visas. Congress (as usual) will cave in to the lobbyists and allow
for this. They are also flooding the labor market with low-skilled labor with more
H-2B visas, that not only displaces more American workers, but also costs
the U.S. taxpayers millions of dollars. The current guestworker program we
have is legalized slavery, (Read the study from the Southern Poverty Law
Center in HTML or PDF).
These guestworker programs have been undermining American worker's rights and
depressing wages for years.

Meanwhile, if a job isn't being imported on a work visa or offshored
to a low-wage country, (U.S. wages are already in a
global race to the bottom), in the 99 percent's economy, most of the jobs
being created in the aftermath of the Great Recession have been temporary and/or
part-time and/or low-paying jobs without any healthcare insurance,
forcing many Americans to use government entitlements, such as Medicaid and
food stamps. Already companies like Walmart are
costing taxpayers millions with these "wage subsidies". And
rather than offer healthcare, employers
are also cutting hours to avoid paying a mandate for ObamaCare (meanwhile
Christy Walton is raking in $1.2 million a day in Walmart stock dividends).

Restaurants
and bars have been adding an average of 50,000 jobs monthly since
April—about double the rate from 2012. Overall, leisure and hospitality
establishments hired more workers than any other industry in June, accounting
for 75,000 of the 195,000 jobs added last month. A number of restaurants and
other low-wage employers say they are increasing their staffs by hiring more
part-time workers to reduce reliance on full-timers before the new healthcare
law takes effect. Besides retail and fast-food chains, large grocery chains
like Wegmans
are also doing the same thing.

And speaking of government entitlements, many of the most desperate
Americans may not have that means of survival either. Regarding food
stamps in the farm bill: “We’ll get to that later.” That was the
dismissive answer of Speaker John Boehner when he was asked if the House would
restore the food stamp program it had just coldly ripped out of the farm bill.
The Republicans will deal with the nation’s most important anti-hunger
program “later" --- meaning, maybe they will think about the needs of
47 million people who can’t afford adequate food. But yet, Congress wants to
give farm subsidies to the wealthy. Not to mention, many in Congress are also
trying to push chained-CPI on Social Security for the disabled and elderly,
while Congressional salaries aren't calculated in that way (and they get a
government paycheck worth $174,000 a year, not to mention healthcare and all
the other perks and allowances they receive).

Things have not gotten better for the 99% since the economy collapsed in
2008, it's only gotten worst. But for the top 1%, things couldn't be better.
Wealth disparity and income inequality continues to escalate --- and now even suburban
poverty is off the charts. Wealth divides us as much as race, ideology or
religion ever has.

Members of Congress (both the Democrats and the Republicans) continue to
ignore the will, wants and needs of THE PEOPLE, and continues to only
represent the interests of the rich and powerful, such as the banks and major
corporations (cough-cough "the job creators"). And then after
many of our political "leaders" leaves office, they go to work for
the very people that they previously did favors for (tit for tat) -- either as
a lobbyist or as a corporate executive (just like Senator Phil Gramm, who pushed
to deregulate the banks in 1999, and then went on to work for a major
bank in 2002).

And when the banks want to do something that they know we will think is
wrong, they will lobby Congress to pass a law (in advance, at the time, or in
the aftermath), making what they do "legal". The bankers and other
corporate CEOs, using their Congressional lap dogs, make the laws, and so
therefore, are above them all. It's well known that most people can't get
ultra-wealthy without doing something totally unethical, morally
reprehensible, corruptly evil and/or extremely dishonest. (Read: New
Study: The Wealthy are more Unethical) And bankers, CEOs and most members
of Congress (who are supposed to regulate the bankers and CEOs) are all at the
top of the list...both the Democrats and the Republicans.

We may have two economies (one for the very rich, and one for the rest of
us), but even though we have two political parties, is there really much
difference, other than the
better of two evils?

Maybe after this post, I really won't have to mention bankers again,
because why bother? Over the course of what's left in my lifetime, nothing
will ever change.

“Wealth is like sea-water; the more the CEOs drink, the thirstier they
become...” - (A shout out to Arthur Schopenhauer)

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Bud Meyers writes about the economy, politics, Social Security, corporate outsourcing, labor statistics, the REAL unemployment rate, taxes and tax evasion, government and corporate corruption, and the plight of the long-term unemployed.